In many different contexts, it would be useful to have a flexible and efficient mechanism for securing a transaction process by protecting and proving the authorization for, validity of and integrity of functional data involved in the transaction process. The contexts of such transaction processes extend across a wide variety of civil, commercial and other applications. For example it may be desired to protect a critical information object, such as a citizen's vote, through a series of propagation steps from polling place to central tally, so as to prevent election fraud and provide transparency and auditability. As another example, it may be desired to protect a personal identifier, such as an email address, by limiting the propagation of authorization to use that address, thereby preventing unwanted spam email. The need to protect proprietary data is also apparent in relation to transactions involving a monetary exchange.
The case of protecting data relating to invoking or using a cash channel is illustrative. A cash channel is a set of authorizations and rights, and associated computer-controlled communications pathways, that permits one or more electronic fund transfers from an origination financial account (such as a bank account having cash assets) to a destination financial account. Cash channels are used in a variety of contexts. One such context relates to executing transactions of financial instruments such as buying and/or selling of securities, funds (e.g., money market funds), or the like. Such transactions generally involve a trade contract and a settlement. The trade contract generally identifies the purchaser/seller, the asset, the quantity at issue (e.g., number of shares), the price, the accounts involved, and any other terms defining the trade. Settlement typically involves reciprocal transfer of shares traded and corresponding transfer of funds. The transfer of funds is generally accomplished by electronic funds transfer using a specified cash channel. It is important that this transfer of funds using the cash channel be accomplished securely and in strict compliance with authorizations governing the cash channel.
Conventionally, such transactions have been securely executed by requiring the owner of the originating account to specifically and directly authorize each transfer of funds from that account. Thus, a purchase transaction can be accomplished as follows. A purchaser first accesses a trade portal to request a purchase, generally identifying the financial instrument desired and a quantity, e.g., in terms of shares or monetary units. The portal can then negotiate with the seller (or its agent) a purchase based on current market conditions. This negotiation results in a generation of a purchase ticket or contract. Based on applicable trading rules and regulations, shares of the financial instrument are transferred to an investment account of the buyer, and funds are transferred from a cash account of the buyer to a cash account of the seller.
The latter transfer generally requires a specific funds transfer request from the buyer (or its agent). Accordingly, details of the transaction, generally including the originating account, the destination account and the amount of the transfer, must be provided together with verifiable authorization information.
This process can be cumbersome and risky. It can be cumbersome because much of the same information generated in connection with entering the trade contract may need to be re-entered in connection with using the cash channel to transfer settlement funds. It can be risky because the repeated entry of this information can lead to data entry errors. Additional risks are involved when trusting a buyer's agent to execute such a request. Whether requested by a buyer or by a buyer's agent, the process itself entails cyber security risk if executed electronically. In the case of corporate treasurers executing large transactions on behalf of the company, errors in this process can involve substantial assets.